What is a conventional mortgage?

A conventional mortgage is defined as a fixed-rate, fixed-payment home loan that usually entails equal payments over a term of 15, 20, or 30 years. This type of mortgage is widely used for purchasing residential properties and is characterized by its predictable payment structure, which aids borrowers in budgeting and planning their long-term finances.

The term "conventional" typically refers to mortgages that are not insured or guaranteed by the government, such as those backed by the Federal Housing Administration (FHA) or the Department of Veterans Affairs (VA). Instead, conventional mortgages are private loans that adhere to the guidelines set by the lender, which may include borrower income requirements and credit score criteria.

In contrast, other types of mortgages such as variable-rate loans or specialized financing for investment properties do not fit the conventional definition. Additionally, while there are loans that might offer no down payment options, these typically fall into different categories and do not represent the standard structure and terms of a conventional mortgage. Therefore, the description provided aligns perfectly with the nature of a conventional mortgage, making it the correct choice.